FAQ: Government response to Tax Working Group report

This week, the Tax Working Group (TWG) released their final report. The TWG is an independent entity from the Government. Their report provides a number of recommendations on how to make our tax system fairer.

Our Coalition Government will take a measured response to this report. We will work together to take into consideration the report's findings, and to find consensus on the best overall package for New Zealanders. We are not bound to accept the recommendations it put forward. It is highly unlikely all recommendations will need to be implemented.

Q: What is the main takeaway of the report?

A: The independent report finds that overall our tax system is clear and simple but there is room for improvement. There is some unfairness that we need to address. We will work through ways to do this to make the system fairer and more balanced.

Q: Will the Government implement everything recommended in the report?

A: The Government is not bound to accept all the recommendations it put forward. There are options to accept some, and/or to phase or sequence aspects of the packages proposed by the Group. It is highly unlikely all recommendations will need to be implemented.

Q: What will we do now?

A: We will be discussing the recommendations with our Coalition and Confidence and Supply partners as we work to find consensus on the best overall package. Ministers expect to release the Government’s full response to the Report in April 2019 following detailed discussions with officials and consultation between Government parties.

Q: Why would we want to change our tax system?

A: There is no need for a major overhaul of the system. Our response will preserve the key principles of our existing broad-based low-rate tax system. However, we do want our tax system to be fair for everyone. We will seek technical advice on addressing the unfair and unbalanced elements identified by the TWG and make further announcements in April on any measures to enhance the fairness and integrity of the tax system. Our aim is to ensure the system is fair for families and businesses and that it offers balance across the wider economy.

Q: When would changes be implemented?

A: If the Government does decide to make changes, no changes arising from the report will be implemented this term. This is as per the commitment we made when we established the TWG. No policy measures would come into force until 1 April 2021 – giving New Zealanders the chance to vote on any decisions made by the Government.

Q: Is anything off limits?

A: The family home, increases to income tax and GST, and an inheritance tax have already been ruled out.

Q: What else are we doing?

A: Tax reform initiatives separate to the work of the TWG will continue in the meantime - such as looking at multinationals that provide digital services. We will keep looking at ways our current tax system fails to address global economic and social forces which affect economic activity.